Supriya Lifescience Limited ($SUPRIYA)

Ladies and gentlemen, good day, and welcome to the Supriya Lifescience Limited Q4 FY '26 Earnings Conference Call. [Operator Instructions] Please note that this conference is being recorded. I will now hand the conference over to Ms. Sneha Salian from EY IR for opening remarks. Thank you, and over to you.

Thank you, Ryan. A warm welcome to all the participants to the Supriya Lifescience Limited Q4 FY '26 Earnings Conference Call. The investor presentation and the financial results are available on the company website and on the stock exchanges. . Please note anything said on this call, which reflects our outlook for the future obviously be construed as a forward-looking statement must be viewed in conjunction with the risks that the company faces. This conference call is being recorded and the transcript along with the audio of the same, will be made available on the website of the company as well as on the exchanges. Please also note that the audio of the conference call is the copyright material of Supriya Lifescience Limited and it cannot be copied, rebroadcasted and/or attributed in the press or media without specific consent of the company. To give you a brief business update and to take you through the results from the management team, we have Dr. Satish Wagh, Executive Chairman and Whole-Time Director; Dr. Saloni Wagh, Managing Director; and Mr. Krishna Raghunathan, Chief Financial Officer. I would now request Dr. Satish Wagh to provide you with a brief update on the quarter. Over to you, sir.

Good morning, and a warm welcome to all the participants. Thank you for joining us as we discuss the quarter 4 financial '26 performance of Supriya Lifescience Limited. I hope you have had the opportunity to review our results and investor presentation, both of which are available on the exchange and the company website. Before we get into the performance details, I'm pleased to announce a significant regulatory milestone for Supriya Lifescience. Our local facility had received the USFDA establishment inspection report EIR with the voluntary action indicated classification following the surprise inspection conducted in February 2026. The inspection resulted in only 1 minor observation, which was proactively addressed underscoring the strength and our compliance culture, robust quality system and awareness to CGMP standards. This achievement reinforces our creditability with global regulators and marks an important stick in sustaining growth in regulated markets. On that note, we -- let me talk you through our full year performance. I am glad to share another achievement. We achieved our financial year '26 revenue target. Despite the challenging quarter, we remain focused on executing our strategic priorities and are delighted to report our highest ever revenue and EBITDA performance for the year with a record quarterly revenues achieved in quarter 4 financial year '26 of INR 277 crores. During quarter 4, industry-wide headwinds arose from geopolitical challenges, including supply chain disruptions, elevated crude and solvent prices and intermittent shortages, which impacted our quarter 4, '26 revenue by INR 10 crores. However, despite that, we have delivered resilient performance. Financial year '26 revenue grew to 18.9% year-on-year to INR 828 crores, in line with our guided growth of 20% while EBITDA stood at INR 294 crores with a robust margin of 35.5%. This performance was driven by the favorable product mix expanding global demand and discipline cost management. Export segment, a key growth driver contributing 82% of the financial year revenues. Europe delivered healthy growth with 14% share during the year background integration initiatives, which also progressed in financial year '26 at 76%, strengthening cost efficiency and supporting sustainable growth. Coming to our new product launches. For our financial year '26, we introduced a key cardiovascular product during financial year quarter 3 financial year '26, which again contributing to Q4 '26. This product has started the scale and expected to pick up higher momentum going forward. We also launched our ADHD product, which has seen strong demand for LATAM and Europe, with a further growth anticipated over the coming quarters. Additionally, our liquid anaesthetic product was commercialized during the year and has been supported by steady month supply. Finally, on the contrast media, while developing the product, we identify the opportunities for further arrangement, which can enhance our economics on the product. Hence, we have decided to continue with the development. It is expected to be launching H2 financial year '27. For financial year '27, we plan to further strengthen our and ADHD portfolios with a 2 launch new launch in such segments aim at enhancing pipeline depth and supporting broader market penetration, along with the sustained growth, we will provide more details about these products in coming quarters. We also glad to share that we have secured all clearances for the Patalganga land, which faced a development to begin with Phase 1 groundbreaking financial year '27. We iterate our guidance of approximately 20% annual growth revenue and EBITDA margin, 33% to 35%. Our trajectory towards the INR 1,000 crore revenue milestone by financial year '27 remains firmly on track, underpinned by a robust pipeline. Planned launches of 3 to 4 products annually and sustained the demand across core therapeutic segments, including anesthetics, antibiotics, vitamins and ADHD. However, the growth won't be linear across the quarter such. We have scheduled our annual maintenance shutdown in August for our older blocks A&D. Nevertheless, we remain highly confident and well positioned to achieve the INR 1,000 crore revenue target by financial year '27 as demonstrated in financial year '26. Going forward, our focus remains on expanding the regulated market, while strengthening our competitive edge to backward integration regulatory expertise and broad portfolio supported by growing customer traction and disciplined execution, we are well positioned to capture long-term growth opportunities and deliver consistent value. With that, I'm now inviting our CFO, Mr. Krishna Raghunathan to take you through the detailed financial performance of Q4 and financial year '26. Thank you.

Thank you, sir. Good morning, everyone. Let me take you all through the operational highlights of the quarter and year-end, following which we will open the floor for question and answers. For Q4 FY '26, the company reported revenue from operations of INR 277 crores as against INR 194 crores in Q4 FY '25, a growth of 50% year-on-year. EBITDA for the quarter stood at INR 98 crores as against INR 68 crores in Q4 FY '25, a growth of 44% year-on-year and EBITDA margin stood at 35% -- 35.5% for Q4 FY '26. PAT stood at INR 74 crores as against INR 50 crores in Q4 FY '25. PAT margin stood at 26.8% for Q4 FY '26. For FY '26, revenue stood at INR 828 crores as against INR 696 crores in FY '25, a growth of 19% year-on-year, broadly in line of our guided numbers. EBITDA stood at INR 294 crores as against INR 261 crores in FY '25, a growth of 13% year-on-year. EBITDA margins were at 35.5% for FY '26, surpassing our guided range of 33% to 35%. PAT stood at INR 209 crores. PAT margins were at 25.3% for FY '26. Our CapEx for FY '26 at INR 152 crores, largely driven by spend on Ambernath facility along with maintenance CapEx and smaller projects, including the block and formulation plant requirements. On the Patalganga land, as our Chairman has updated, we have received all necessary clearances and will be developing the facility in phases. The project will include 2 APA stoke advanced intermediate blocks and 2 formulation blocks. The total CapEx earmark for this facility is around INR 200 crores for Phase 1. On borrowings, we would like to report that for the full year, we have not utilized any working capital limits except credits and bank guarantees. With that, we can open the floor for question and answers. Thank you.

[Operator Instructions] We take the first question from the line of Rachna Kukreja from SIMPL.

Congrats teams on a good set of numbers. I have a few questions. For FY '26, top therapeutic areas have contributed around 91% to our revenues. So this means that other therapeutic areas have contributed around 9% in FY '26 7%. That comes to around INR 75 crores in FY '26 versus INR 50 crores in FY '25. So if you could please provide some further or down on which are the other therapies contributed here? And is this likely a onetime event?

So we have actively introduced a lot of products in the anesthetic therapeutic category last year. And we have also introduced in cardiovascular and other advanced intermediate because the anesthetic portfolio now has 6, 7 products and they are our fast-growing products across regulated markets, you feel that they are the larger contributors. Having said that, other than anesthesia, antihistamines are fairly stable. Vitamins, we have actually seen a very good growth because also the DSM volumes have now stabilized. And for a lot of other vitamins like B12 and all, we are getting good traction. And other than this, the other therapies like anti-hypertensive are also -- we are seeing good traction. So it is not like that, that the larger contribution is coming from the top therapeutic categories or new few selected products. The range in those products is also growing for us.

Okay. Apart from key therapeutic categories, other than I mentioned in the presentation. And as you said, what would be other categories where we are seeing growth?

So these are mainly smaller therapeutic categories like anti-allergic where we had some products, but as a strategy, we are not aggressively entering into nonregulated market because we are a very margin-focused company. So our goal is always to tap more regulated markets. So their contribution will always remain to the lower end, but yes, anti-allergic are there, like I mentioned, antihypertensive is there, which is not shown in the presentation. So these are 2, 3 categories, where we are seeing decent growth. But as a strategy, we are only focusing more on the regulated markets.

See, I would like to add something on it. Ma'am, you should see first the portfolio of all the products. We are focused on China. So whatever products are not getting from India, those products are focused on the therapeutic category. So whatever products we add, we are having a future growth for the next 3 years, which we will visualize and we put. This is some information for your additional note.

Okay. Second question is growth has been across markets, but overall, Asia and Europe have grown very strongly. So again, if you could provide some color on what has driven growth in these markets?

So we have always maintained that related markets are our focus areas. And Europe has always been a large revenue contributor for us. The main growth in come because we have actively got CP approvals for 3 products. So there is some traction we are already noticing that the existing products where we already have CEP, we were able to acquire new customers. So that's one of the main reasons why the Europe market has grown. In Asia, whenever we launch any new product, the first penetration happens in domestic market as well as the Asian market because the regulatory barrier for these markets is lower and they are semi-regulated. So all the new products that we launched, the 3 products last year, where we have seen good traction in Asia and semi-regulated markets. That's why the contribution of these 2 markets have grown in this year.

One last question, if you could.

Rachana, I would request you to please join the queue for follow-up questions. We take the next question from the line of Sajal Kapoor from Anti-fragile Thinking.

Yes. I'm trying to understand the business over a medium- to long-term horizon. So my questions are probably a little different from what you normally get asked. So two questions to begin with. Reflecting on the last decade, what problem is Supriya now capable of taking on that would have seemed out of reach perhaps 10 years ago? And how has your R&D approach had to evolve to make that possible? That's my first question.

So the first thing is on the regulatory part of it. I think now we are more capable of handling regulatory expectations. And the best example for that is the USFDA approval that we got in the last quarter. It was a complete surprise in section where the auditors just walked into the facility with no prior intimation. And we were able to clear that surprise audit of 7 days across 7 manufacturing blocks with only 1 minor observation. So I think definitely because of the better infrastructure and the capacities that we have built in the last 3, 4 years, regulatory has been a positive takeaway for us in that. And on the R&D cost, the R&D approach has also changed for us in the last 5, 6 years. Previously, the R&D was only focused on life cycle management. And the same on R&D was also significantly, but in the last 3 years, we have set up a new R&D facility at Lote, plus a new R&D facility at Ambernath. So our spend has also doubled. And with now our R&D-focused approach, we have been able to successfully launch 3 to 4 new products every year. So I think these 2 things have definitely been very different from what we have seen in the last 1 decade.

Yes, that's helpful. And the second is as the business continues to scale after expanding across products, capacities and geographies almost simultaneously, what becomes the dominant priority between capital allocation, managing complexity or improving utilization of current CapEx, growth CapEx like Ambernath and other newer sites. What is more important today?

So I think today, the most important thing for us is further capacity building and now a lot of funds would be allocated towards that. Like our Chairman mentioned that we already got the clearances for Patalganga. And because we can see a very good growth in our existing set of products plus the new launches, which will come up in the next couple of quarters. We need to be prepared for when these products scale. So a large portion of the CapEx would be put up for Patalganga to the tune of about INR 200 crores in the next 2 years for further capacity building. Plus CMO, CDMO, we are seeing good traction. There are a lot of the larger companies want to tie up with us for a lot of and basket kind of products. So we need to put up capacity for taking care of that growth as well. So I think a lot would be focused on capacity enhancement.

We take the next question from the line of Sanjay Kumar from iThought PMS.

So first question on the cardiovascular product. I think we had previously indicated that we have 1,000 tonne capacity, of which 300 tonnes you are in advanced discussions. So have we converted that to a final order? If else, can we still tonnes be fully utilized in FY '27? Also, can you talk about the regulatory aspects of this particular intermediate? Because if I'm right, I think there is a PLI for this product, which was won by another competitor.

So we have seen very good scale-up of this advanced intermediate in quarter 4. Already, we have started seeing revenue contribution and the 300 metric tonnes, I think we'll come very close to that number in FY '27, looking at the current order book that we have. So that product is scaling up really well. From the regulatory perspective, we have not enrolled ourselves into any PLI scheme. And as a policy and our Chairman's thought process, we don't intend to do that. We are focusing more on getting the customer action and getting the larger customers to qualify us and make us a part of their dozier, which has already started happening. So we have been able to lock in contracts with before very large results, who will take care of the 300 metric tonne capacity.

Okay. Got it. And the cost for this would roughly be around $100 per week?

That will not be able any product-specific prices and costing cannot be discussed in I'm sorry.

Okay. Second question on the anesthetic. Have we signed the CMO customer for the liquid anesthetic formulation? And what are the contract structure for this product? And if you can talk about the capacity and the revenue potential in FY '27?

So we have 1,000 metric tonne plus capacity, which is built in the current facility. And the CMO discussion is at an advanced stage, but we'll not be able to divulge any more information on that unless a form term sheet is signed. So we will be -- the revenue contribution on all we'll be able to tell only in the coming few quarters once everything is finalized.

I want to add 1 Excuse, sir. I want to add 1 more piece. First thing, I think you people must understand we are in China plus one. So if China is saving a product and India does not have any manufacturer, what do you think the product should be manufactured or product?What is your suggestion on that?

Definitely, there is a future we have.

So having an experience in the manufacturing facility for almost more than 47 years. So we do have an understanding that we will do this and China plus one will fight continuously because we don't want to fight in India with other manufacturers. Otherwise, it will be EBIT of 7% in the future. I'm sure you understand.

Definitely. Yes. Got it. Okay. And just a follow-up to your initial.

I would request you to join back the queue for follow-up questions. We take the next question from the line of for Molecule Ventures.

Am I audible?

Yes.

So firstly, congratulations on a good set of numbers. My first question is on the S block at Lote Parshuram plant, which was mentioned in your presentation. So how much capacity are you planning to add with this new block? And what kind of CapEx are we envisaging for the same?

So we are planning to add about 150 to 200 kl for the capacity and this will come up in the next 2 years' time. We are expecting about INR 40 crores to INR 50 crores of CapEx in this for this dedicated for the S block.

Okay. Understood. And secondly, on the growth drivers. So we do our revenue to close in this quarter, which is a very interactive growth. So my question is, by any chance as that any contribution from the CDMO segment because we were expecting some kind of revenue from our contract in this quarter? Or was this entirely driven by the API segment, given that we launched 2 new API in the last quarter?

So it's a combination of our new launches. Plus, of course, the DSM contract is now stabilized and we are doing volumes of about 3 tonnes a month. So DS actually has contributed to the tune of INR 30 crores, INR 35 crores in the last financial year. And the peak that we expect is about INR 60 crores, which we'll be able to see in FY '27. So the growth is mainly coming from the DSM contract coming or reaching this stable condition, plus the new launches, the new product that we launched, the cardiovascular advanced intermediate as well as the anesthetic API, they have also contributed in the last quarter. As we grow in the existing basket is also there. So all our existing APIs across different therapies, we are seeing good traction in regulated markets like Lote on LatAm. So their demands have also gone up. So I would say it's the combination of.

We take the next question from the line of Abhishek from Padmaja Investments.

Am I audible?

Yes.

Yes. My first question first question is regarding U.S. market. Like what are the constraints like are we not able to participate having USFDA regulation is like 1% was not in Q4 FY '26 number, if you see. We are even filing gap.

So the current portfolio that we have, the larger market is in Europe and LatAm because most of the finished formulators are based across the geography. So the current portfolio inherently does not have a very large market in the U.S. But some of the new products that we are launching that we launched last year, plus the ADHD drug and some of the new products that we launch in this -- the next financial year, they will have a larger market in the U.S. So you will see in the next 3, 4 years, the exposure to U.S. market will grow. But having said that, Europe and LatAm would still be the larger market for us.

Okay. And second question is on the proteins, like the advent of this weight loss, protein consumption has significantly increased, right? So if there are any of it, like do we have any formats? I do remember you saying that there are a few inquiries from Southeast Asian markets in the past con call where is it -- can we expect a jump in FY '27?

No. So we have said this in the last couple of earnings calls as well that this particular technology is a very new technology in the protein market and especially for the Indian market, it's first of its kind. So a lot of research is happening with the larger end users. They have already bought smaller quantity samples from us, and they are developing their products, the finish formulations with those samples. So this will not be like an immediate turnaround for us. I think it would still take some time. I'm not seeing any large revenue that can come in FY '27. But we will, of course, keep updating as and when we have some development on that.

We take the next question from the line of Rupesh Satiya from Long Equity Partners.

My first question is, sir, on this cardiovascular intermediate. I mean you were saying that you have order book, which will utilize, let's say, 300 metric tonne of capacity. And then if I were to tie that back with your revenue growth guidance, where you're saying you will go from INR 830-odd crores to INR 1,000 crores. But this single product itself will give us that kind of growth is my understanding. So are you expecting some degrowth in your core portfolio? I mean, the two things don't add up, just this one product and the revenue growth guidance.

So the 300 metric tonne what we indicated will not come to mean FY '27. I said we'll get to maximum utilization in FY '27, but the entire number to come will happen over the next 2 to 3 years time. So that's the reason why we are not guiding the full potential revenue in FY '27 for that product. And there is no degrowth in any of the therapeutic categories or our product basket. They are all growing, but because regulated markets has been a focused area for us regulatory approval takes time.So the growth will also come eventually. It will not come in 1 year's time, although there is potential for that.

100, 150 metric tonne. Is that a fair number for the model?

Sir, in terms of quantity, we cannot discuss on this forum, please.

Okay. Okay. And the second question is how do you see liquid anesthetic product ramp-up in FY '27? And the linked question to that is, where are we on the European approval for the formulation facility? I thought we should have already had a bid by now, maybe some sort of approval for the whole thing looks delayed.

So no, we have not been able to get the audit dates from the auditors. But we have some indication from them that the audit would be scheduled in H2 of FY '27. Before that, there was no availability of the auditors, but we are expecting it to happen in H2 or time. And it's typically around October or November, the day we have earlier.

So without -- let's say, without the approval, how do you see the ramp-up of liquid anesthetic products in FY '27?

So in FY '27, as far as the finished formulation liquid anesthetic ramp-up is there, we'll not see much revenue contribution. The liquid anesthetic contribution will only come from the API from the Lote side. because it will take us 3 to 4 years to get the ramp-up in the finished formulation facility.

I will add some more things on this. See, for selling the product, you don't need a European agency to come here because we already have WHO and COPP in existence. For selling that product, currently, even in U.S., our Dermacell, we have already filed the CEP. So selling is not a big issue because this is, again, China plus one. Do you understand that?

Yes, yes.

So Rupesh, I would take best to join back the queue for follow-up questions. We take the next question from the line of Darshil Jhaveri from Crown Capital.

Firstly, congratulations on a really great set of results, sir. Sir, just wanted to understand two parts, like our Q4 has been really tremendous. So this run rate, can we maintain like are we going to face some capacity constraint because I think we said in the PPT you are around at 76%. So how do you see that, sir? Or is there -- was there a part of seasonality in Q4 because Q4 has really outperformed the others? So could you just -- or can we maintain this run rate, sir?

I'm sorry, can you repeat the question? I was not going to get the first part of the question.

So basically, Q4, we've done a really great growth. And usually, we don't have that much seasonality in Q4, Q3. So can we expect Q4 run rate of INR 270 crores to be maintained over the period of time? So what do you feel about that?

So no, I mean we'll not be able to give any quarter-on-quarter guidance of the run rate. Like we have said that in FY '27, we'll be able to achieve the INR 1,000 crores. So all quarters might not be linear growth, because like our Chairman said already that in the quarter 2, we are expecting some shutdown and some refurbishing activities. So that run rate maintenance will not happen. But we'll be able to achieve the INR 1,000 crore guidance that we have given.

Okay. Okay. Okay. Fair enough. Fair enough. And with capacity utilization, I think we are around 76%. So by this year end, we will be completely utilized, right? And the new facilities that we are going to come commensurate that would be in FY '28, right? Is that a fair understanding what would be the potential from them if you would quantify in FY '28?

So we are doing a lot of debottlenecking activities, and that's one of the reasons why we are taking the shutdown in quarter 2. So all the bottlenecking across different blocks, plus we are also planning to put up a block, and there is an extension that will come to the D block. So all these put together will give us an additional capacity of 150 to 200,000, which will be utilized over the period of 2 to 3 years. So we'll not be able to quantify at this point how much of an additional revenue that would give, but we are building that capacity to take care of the growth that we are seeing in the existing APIs plus the new launch products.

Okay. Okay. Fair. And just last question from my end. It's a bookkeeping question. Q4 for the tax rate was relatively low. So what is our effective tax rate for like the next year? Could we quantify that?

I think the average will be somewhere between 24 to 25.17, that would be the rate you will be landing to.

And Q4 is a basically full year minus 3, 3 quarters. That is or it can be put somewhere around, say, 25-point also.

We take the next question from the line of Aditya from MSA Capital Partners.

Great set of performance. Q4 was really, really good. And as you had commented last quarter that this quarter is really going to be good as per your commentary came in. Just wanted to understand on the gross margins. So we saw a bit of hit on gross margin. Is it largely because of the the scale-up of cardiovascular intermediate? Or is it because of some raw material prices that we are seeing?

So as you know, that we never guide on gross margin. So I'll not be able to comment anything.

I just want your commentary that what happened this quarter versus the 3 quarters that went into FY '26? No guidance, just commentary.

So no, I mean, we don't talk on gross margins, but also we'll not be able to speak on gross margins. If you have a question around the EBITDA margin, yes, there I can explain a little bit that the expenses of Ambernath have started for us, which is a very large number and the revenue from Ambernath has still not started. So that is one of the reasons why although the EBITDA has grown in absolute terms in terms of percentage, it looks slightly lower than the last financial year only because the expense part of Ambernath has now started.

Understood. And when are we expecting on the Riboflavin of DSM contract, to start to scale up because that is largely event and the other is Ambernath. When can Ambernath become a revenue event for us?

The SMI already commented just a while back that already we have done around INR 30 crores, INR 35 crores of revenue last year from DSM and INR 60 crores is the peak. I think we'll come very close to that number in FY '27. Ambernath, we have started some revenue generation but very small. I think the full effect of Ambernath revenue contribution will still take about 2 to 3 years. But in FY '27, you can see some revenue contribution from Ambernath mainly coming in from the semi-regulated markets.

We take the next question from the line of Kiran from Table Tree Capital.

So a couple of questions. First question, just from a regulatory clarity perspective in Ambernath usage, so we have USFDA, EIR and new GMP for the Lote facility. Ambernath EU is scheduled in H2 FY '27 and USFDA, we don't know yet. Is that the right understanding? And when will Ambernath start contributing to revenues? Is it FY '28?

So in FY '27, Ambernath will contribute to revenue. But the full effect of Ambernath will at least take 3 to 4 years. As far as the FDA is concerned, yes, like rightly said, the EU audit is scheduled for H2 FY '27, but we still have not got the dates for USFDA audit. We are following up with them. However, due to unavailability of auditors, we are not able to get a data as of now. But the Lote facility has all the approvals, including USFDA, which has happened in the last quarter.

Perfect. Perfect. The second question is in terms of -- we were supposed to launch a media product in Q4. What is the status and scale-up? And two, on our main products, are we seeing any pricing pressures in the European or the U.S. market? If you could just answer these two, that would be great.

So like our Chairman explained in his opening speech in contrast media, we have identified that the technology needs to be further strengthened, and we see an opportunity for that because we are a very margin-focused company. We need to get the best process in line and the most cost-efficient one. So a lot of work is happening on that in the R&D. We are expecting to now launch this product in H2 FY '27 in the coming few quarters as soon as we have some clarity, we can let you know the launch date. But as of now, it's scheduled to be in H2 FY '27.

Got it. Pricing pressure on the main product?

Pricing pressure, as of now, we are not seeing much because we have a very agile way of working and a lot of the price increases that we were seeing in Solvents because of the increase in the crude prices, we were able to pass them on to our customers, because we work with customers on a purchase order basis. So whatever little increase we have seen in raw material prices, we have been able to pass on to the customers, and they have also accepted that. So we are not seeing much pressure in terms of pricing on the final API.

[Operator Instructions] We take the next question from the line of Dhiraj Kumar Reddy from Alpha Square.

A couple of questions. The first one being like in the previous participant's question, you mentioned about your R&D budgets being like almost doubled or like even they went beyond over the last decade. What are the areas currently we are investing into? And also, maybe if you can touch upon like beyond FY '28, what are the kind of growth areas today that the company is focusing on? I know that like for the next 2 years, I think the growth is almost sorted, but what is beyond FY '28 or FY '29?

So in regards to R&D, we have actually set up 2 new R&D labs. One we set up at Lote about 2 years back, and we have also set up one in Ambernath last year. The main focus of R&D is in 3 different areas. One is addition of new APIs to the portfolio every year from newer therapies. And we are always focusing on like our Chairman said niche molecules where we are able to bank on the China plus one strategy. Other than this, R&D is also focusing on CMO, CDMO CRO areas, where we are looking at larger tie-ups with the larger multinationals or innovators. So that's one area that we are working on. And then there is also formulations R&D at Ambernath, which is focusing on finished formulations. Mainly, we are focusing again there on niche areas like liquid and aesthetics and injectables. So these are the 3 different areas where R&D is currently focusing and that's why the R&D budget has also doubled. We expect this to grow in the next couple of years with increasing investments in R&D across these 3 trend areas. As far as the growth in the next 3 to 4 years is concerned, we have already said that we'll grow 20% plus year-on-year. So I think that kind of trend, we would continue. When Ambernath is fully commercialized and with Patalganga coming in, the growth can be accelerated, but that we'll be able to comment in the coming few quarters.

Got it. Now my next question is if everything comes online, Ambernath and Patalganga, what is the maximum potential for the company? I mean in terms of revenue and in terms of like overall margin structures because obviously, by then our expenses also would have been much more -- there could be some operating leverage also which will kick in. Do you see like this 35%, 36% today, what we are doing can actually go to 38%, 39% because cost being like much more accretive to the overall business?

Like I said, the larger guidance on FY '28 and the next couple of years, we'll only be able to give in the coming few quarters. because we still have not reached the full revenue potential of another regulatory approvals have not yet come in. So one tying all those things are there, we'll be able to guide on the further numbers. And as far as margins are concerned...

No, no, I'm just trying to mention what is the peak revenue potential if Ambernath and Patalganga goes online and what is the peak overall?

It depends on the product mix. It completely depends on the product mix for us. And we are still not in that stage where we have finalized the new product pipeline for Patalganga. So it completely depends on the product mix and the kind of CMO, CDMO opportunities that we get because Ambernath is a mainly CMO, CDMO focused finished formulation facility. It completely depends on that. And as of now, we have a lot of discussions ongoing. But up and until nothing is signed and the term sheets are not there, we'll not be able to guide on the full potential numbers. But we will come to that in the coming few quarters once we have full clarity on the CMO, CDMO opportunities.

Understood. On the EBITDA margin?

The EBITDA margin, 33% to 35% is something that we would like to continue guiding because whenever we launch any new products may be on the API side or the finished formulation side, the first scale-up always happens in semi-regulated markets where the prices that you get are not as high as the regulated market. And then it takes 2 to 3 years for the product to mature into regulated markets. And because now we are actively every year, adding 3 to 4 new molecules in our basket, plus new products on the finished formulations also. There will always be some products in semi-regulated markets and some in regulated. And because the cycle will continue for us in the next 5 to 6 years, the margin would be around 33% to 35%.

We take the next question from the line of Dipankar Bist from CCV Investment Managers.

Am I audible?

I'm able to hear you.

So my question was, in the presentation, it is mentioned that GLP-1 product development this product mainly ending generic company. So is this a signed agreement or is it still in discussion?

It's still in discussion phase, but it is at a very advanced discussion phase, but we still have not signed the agreement.

So by when can we expect the revenue from this segment?

So revenue will take at least 2 years because it's just the development has also not started. We are still in discussion with them. And as for their expectation, some development work has started, but I think it will still take 2 years minimum for some revenue to start coming in from this.

Okay. And next question was in that net working capital for was in place to 170 days in FY '26 compared to 158 in FY '25. And I believe it passed 124 days in FY '24. So what reversed this improvement? And what sort of working capital target for FY '27?

We are looking at around 170 to 180 days from going forward. So what is happening is as the business is growing and the base had increased because the last 2 months of the -- that is why the debtor days have gone up and because of the debtor days, see what do you call the working capital days also had a would be trying to hit somewhere between 170 to 180 days moving forward because now the Ambernath will also be coming into the picture. We believe that somewhere on 170 to 180 days, I think, should be a stable state number.

Okay. And sir, for this cardiovascular segment, is this filing U.S. and EU or just for regulated markets?

So this is an advanced intermediate. So we need not do any filings in Europe or U.S.

We take the next question from the line of Sajal Kapoor from Anti-fragile Thinking.

And Krishna, just one for you probably. It's regarding the conversion of EBITDA into operating cash, the trajectory has somewhat shifted post COVID. So inventory days have been running at close to 200 days for 2 years now. Is that a deliberate buffer given the backward integration model and positioning Supriya as a USFDA alternative to China? Or -- and this is a near-term sort of a blip, and we can expect inventory days to normalize below 200 because obviously, that will help converting more of EBITDA into operating cash flow to then fuel Patalganga and the other growth CapEx that we might be taking, let's say, in 2028 and 2029.

See, Sajal, what is happening here is we see a lot of the products are having a higher volume. And because of the backward integration, you are necessarily you need to carry higher inventory. And specifically, like the cardiovascular product as well as the liquid anesthetic, I think since the capacities are huge, even the intermediates, what we had to hold are becoming huge. And that is one of the reasons why the inventory levels are also up. Of course, the rest of the inventory, there is also Ambernath inventory, which is also getting added up already in the increase. I would attribute at least INR 10 crores to INR 15 crores from Ambernath inventory already. So these two are increasing the inventory days as well as the amount in inventory.

No, helpful. And finally, on the receivables from 72 days, we are now at 78 days. Is a slight upward jump, not massive, but how do you see receivables going ahead?

No, I'm not much concerned on the receivables side. See, we will be able to maintain between 80 to 85 days even at the worst of a sense. I think a major amount of sales were -- I mean the receivables were of the last 2 months. So that is what the receivable days have also gone up a bit. I don't think that would be concern as long as we have our control substances where we do take amounts in advance. I am not much concerned might be on the Ambernath side, once it crops up, we will have to see how the things pan.

We take the next question from the line of Sanjay Kumar from iThought PMS.

Satish sir, a question to you. So on contrast media, can you explain some competitive advantages that we have wished to develop because the incumbent is a gain, who works at a large scale and massive efficiencies. On a similar note, if you can explain the novelty of the tablet, right? So really you are saying it's better protected. How is it different from say, tablet?

Sorry, can you repeat that question? I was not able to get the first part?

The first 1 was on the contrast media. Can you explain some competitive advantages that we have managed to develop because the incumbent is a gain, who works on large scale and efficiency.

So there, I think the technology that we have and the process that we are working on is more cost efficient than whatever who is available in the market currently. Also, as a product, it's a very, very large molecule and the market size of that product is growing year-on-year. So there is definitely space for 2, 3 large companies to participate and get a sizable share of the market. And that's what we are focusing on. We are not intending to be market leaders with more than 40%, 50% of the market share. But because the molecule itself is so large and a lot of our existing customers across regulated markets have been prompting us to take up this product because they have very large requirements. So I think that's the reason why we chose the product and the process is something which would be a standout as compared to what is available in the market, which would result into better cost.

Can you explain on the process in terms of, let's say, IL recovery or the usage? How are we on -- when compared to the leaders?

No. Unfortunately, we'll not be able to divulge a lot of information about our process because that's something that the R&D has worked on for the last 2, 3 years. So it's a very confidential thing to us as a company.

Okay. Then on the novel semaglutide tablet formulation for which we have patent, how is it different from -- now oral tablet?

I think the binding agent, what we have is different from what they are currently using, but it is still at a very -- I mean, we are still doing a lot of research on that. We have filed the patent and we have, in fact, approached on or is also because the formulation that we have has better absorption as compared to what is available on the market. That is how it is different.

Okay. Got it. So I can squeeze in one more. On CVS, we were doing 5 steps so far. Eventually, we wanted to get to 8 steps. So where are we in that backward integration process for the cardiovascular product?

So at this point, we have already gone to full backward integration because when the volumes scaled up, we were waiting for the volumes to scale up, now that the volumes have scaled up, we have already fully backward integrated.

Ladies and gentlemen, due to paucity of time, we take that as the last question and conclude the question-and-answer session. On behalf of Supriya Lifescience Limited, that concludes this conference call. Thank you for joining us, and you may now disconnect your lines.